For the past decade, oil prices have caused trouble whether they have been rising or falling. There is no level that does not pose a problem for either consumers or some producers. Venezuela, for example, has been a spectacular casualty of the low prices of 2015 and early 2016. The beginnings of the 2007-9 recessions in many countries were accompanied by extremely high prices that approached $150 a barrel in June 2008. In political terms, American elections are not readily won with West Texas Intermediate, the US standard, at $75 and rising, and oil-dependent Saudi Arabia’s budget becomes severely strained when Brent falls below $70.
The stand-off between US president Donald Trump and Saudi Arabia over escalating prices began in April when the Saudi energy minister, Khalid Al Falih, said the world could cope with $75-a-barrel oil and Mr Trump tweeted back that Opec’s “very high” price was not acceptable. This conflict of interests has intensified because of the two governments’ supposed geopolitical understanding over Iran.
American sanctions on Iran’s oil sales come into effect on November 4 and, if this move is not to hurt other economies, output elsewhere must rise. Initially, the Saudis appeared willing to oblige, reaching an agreement in June with Russia to produce another 1m barrels a day. But last month Mr Trump declared again that Opec was “ ripping off the rest of the world”.